How Does Our SaaS Churn Calculator Work?
Churn is simply the number of SaaS subscribers who abandon your software during a specified period of time. Churn can also be represented in different ways.
For example, user Churn is the percentage of people who leave your business during a specified period of time. Revenue churn on the other hand, is the amount of revenue you lose each month as the result of user churn.
Churn is important for many reasons. When thinking about churn, a lot of people think about the leaky bucket analogy. If you have a leaky bucket you need to continue topping up the bucket with water to replace the water that’s leaking out. However, if you’re able to reduce the leak, you won’t need to spend as much energy putting new water into the bucket.
Many SaaS companies focus heavily on new customer acquisition. However, this can be a mistake. It’s much harder and generally more expensive to find a new customer compared to the costs of keeping current customers happy. Churn is an important metric to analyze. Try not to look at churn as how much money you’re losing each month, but instead look at churn as customer satisfaction metrics. The more satisfied your customers are, the easier it will be to scale your business.
Different Types of Churn
Churn can broken down into two categories:
Intentional churn: Intentional churn is a type of churn where the customers cancel their subscription because they don’t wish to continue using your solution any longer. For example, they may have found a superior product or an alternative product that has a feature they really wanted.
Unintentional churn: Unintentional churn is a type of churn that happens when their are problems with a customer’s billing details (card expiring, card decline etc).
Different types of churn need to be battled in different ways. As you mentioned above, intentional churn is often a result of friction between your users and your product (pricing, UI, features, UX etc).
What is the churn equation?
is generally measured as a percentage of total users who unsubscribed to your SaaS divided by the total remaining subscribers.
For example, imagine at the beginning of the month you had 100 customers. and then during this month 15 new customers sign up. But at the end of the month if you only have 110 customers, that means 5 customers have churned.
Remember, at the beginning of the month we had 100 customers. Our of those 100 customers only 95 are left. This means our churn rate is 5%.
Churn is one of the most important SaaS metrics to monitor. It’s a SaaS metric that has one of the most significant impacts on a SaaS company’s bottom line. If you want to see the impact that churn will have on your LTV (Customer Lifetime Value), then we encourage you to visit our SaaS LTV calculator page and modify the churn rate on that page to see the huge impact that churn can have on your SaaS company’s health.
Hi There! 👋
Thanks for using our real-time SaaS churn calculator!
This calculator will allow you to see what impact changes in your churn rate will have on your monthly recurring revenue (MRR).
Decreasing your churn rate is one of the quickest and easiest ways to improve the bottom line of your SaaS company.
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